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APR Calculator

A loan's APR counts its fees as well as its interest rate. Enter the rate, term and upfront fees to see the true yearly cost and the monthly payment.

A $10,000 loan at 9% over 60 months with $300 of fees has an APR of 10.31%: the fees add 1.31 percentage points a year. The payment is $208 a month.

APR
10.31%
Monthly payment
$208
Total interest
$2,455
Total cost of the loan (interest and fees)
$2,755

APR of a $10,000 loan at 9%, by upfront fee and term

Upfront fee24 months36 months60 months
$0 (0%)9.00%9.00%9.00%
$200 (2%)11.02%10.39%9.87%
$500 (5%)14.16%12.54%11.22%
$1,000 (10%)19.72%16.36%13.61%

Monthly payment on a $10,000 loan, by rate and term

Rate24 months36 months48 months60 months
6%$443$304$235$193
9%$457$318$249$208
12%$471$332$263$222
18%$499$362$294$254
24%$529$392$326$288

How this calculator works

The monthly payment comes from the loan amount, the interest rate and the term. The APR is the yearly rate at which those payments are worth exactly the money you actually receive: the loan minus its prepaid finance charges, such as an origination fee.

This is the actuarial method of Regulation Z, Appendix J. It is solved numerically, to well within the 1/8 of a percentage point tolerance the rule allows.

Because fees are spread over the term, the same fee raises the APR more on a short loan than a long one.

What it assumes

  • Equal monthly payments and fees paid at the start (deducted from the loan or paid in cash).
  • Only finance charges belong in the fees: origination fees and points, for example. Late fees and optional add-ons don't count (12 CFR 1026.4).
  • Credit cards are different: their APR has no fees in it, and interest is charged at a daily rate of APR ÷ 365.

Questions people ask

What is the difference between APR and interest rate?

The interest rate sets your payment. The APR adds the loan's fees, spread over its term, so it is the better figure for comparing loans. A $10,000, 60-month loan at 9% with a $500 fee has an APR of 11.22%.

Which fees are included in APR?

Finance charges: interest, origination fees, points, and some service and credit-insurance charges that are required for the loan. Late fees, and fees you would pay in a cash deal too, are not (12 CFR 1026.4).

Why is a short loan's APR higher with the same fee?

The fee is spread over fewer months. A $500 fee on $10,000 at 9% gives an APR of 14.16% over 24 months but 11.22% over 60.

How is credit card interest calculated from APR?

Most issuers divide the APR by 365 for a daily rate and charge it on your average daily balance. At 24% APR, that is 0.0658% a day.

Is a lower APR always the cheaper loan?

For the same amount and term, yes. Across different terms, compare the total cost as well: a longer loan can have a lower APR and still cost more in interest.

Terms explained

Related calculators

  • Credit Card Payoff CalculatorHow long a card balance takes to pay off at a fixed monthly payment, what the interest costs, and what paying a little more saves.
  • APY CalculatorTurn an interest rate and its compounding into APY, the annual percentage yield banks quote, and see what it earns.
  • Balance Transfer CalculatorWhether moving a card balance to a 0% intro APR card saves money once the transfer fee is paid, and the payment that clears it before the 0% ends.

Sources

Updated by the RateHerald team. The maths is tested against worked examples; report a problem.

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